The ripple effects of the coronavirus pandemic could cause companies to de-prioritise their digitalisation, but Nucoro believes that would be a “significant missed opportunity.” Instead of stopping, firms should be doubling down.
With the threat of an economic recession, it is understandable financial institutions would look to halt innovation and bunker down for the hard winter, but Nucoro’s new blog claims they should embrace the change in order to survive.
Banks have been fully engaged with digitalisation for a number of years, but this has mainly been for cost reduction. The tide is shifting and they are starting to use technology as a revenue generator, which Nucoro says is “arguably the point at which banking innovation becomes a critical point of commercial differentiation.”
Nucoro believes innovators will be able to take market share from rivals that are lagging behind. It said, “As the digital generations age, the opportunity to win new customers through a slick digital offering increases.”
Secondly, technology offers a variety of opportunities to create new products and services, which can diversify a bank’s core offering and increase revenue generation.
Finally, Nucoro states that innovating with technology can provide a more accessible route to diversification into new lines of business adjacent to the bank’s core offering. This opens them to entirely new markets and revenue streams.
With the market in such a volatile state, why should banks persevere with their digitalisation? Well, Nucoro said, “evidence points to the fact that sustained effort and investment are essential to see the true value of any innovation programme. Pressing pause on the programme due to the COVID-19 outbreak will put a break in that sustained effort, slowing the realisation of the promised value and could in fact put banks at a significant competitive disadvantage in the future.”
That is not all. The WealthTech company states that if traditional banking firms take their foot off the pedal, they could be giving FinTechs an opportunity to take some of their market share.
Finally, Nucoro states the current market conditions, such as isolation and remote working, are a natural driver for innovation and it would be remiss to avoid it.
The WealthTech has identified eight areas of banking innovation primed for development during this time. These include upgrading the customer experience, omnichannel engagement, banking operation innovation, customer engagement, personalisation, debt management and financial fitness products, partnerships and speed of change.
“The typical response to any kind of major global crisis, be that financial or otherwise is to start looking for things that you can stop. To cut costs, be lean and hunker down to try and weather out the storm.
“As we have seen, in the realm of banking innovation that could well prove to be a serious strategic faux pas and the unique pressures produced by our current situation are forcing even the most die hard traditionalists to enter new realms of possibility and press for a greater pace of change.”
To read the full blog post click here.
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